A Glance at 2008 for Georgia
First, here is a little history. The Georgia General Assembly (formed in 1777) is older than the United States Congress (which was created by the United States Constitution in 1789). The 180 Representatives and 56 Senators meet in Atlanta beginning on the second Monday in January for no longer than forty days each year. There is no requirement that the forty days be consecutive, hence the session will likely extend into April. Before it is over, almost everyone will wish that it was limited to forty consecutive days.
The 2008 Session of the Georgia General Assembly promises to be exciting and entertaining. Although Republicans control both chambers in the General Assembly, and the office of the Governor, there are genuine battles brewing amongst the Georgia House of Representatives, the Georgia Senate, and the Governor for political power and control in Georgia. Notwithstanding the passage of time, the sting of the Governor’s vetoes remains fresh in the minds of many Representatives and a few Senators.
While settling simmering political scores remains high on the political entertainment charts, it will be the budget that signals the winner of the political power struggle in Georgia. There are two different components of the budget fight - spending (including the prioritization of spending) and taxes.
As the third fastest growing state, it is not surprising that Georgia’s state government spending has increased steadily since the Republicans gained control. Notwithstanding the increases, Georgia has been able to fund its reserves, pay down its debt, and avoid tax increases. In a world with huge federal deficits, balanced budgets without tax increases are notable and impressive.
Yet, Georgia’s success in collecting money from Georgia taxpayers may have cloaked a real spending problem. After all, big tax revenues often relieve the political pressure necessary to force the tough budget decisions required to limit a growing bureaucratic government funded by excessive government spending.
Apart from the total amount of Georgia’s state government spending, there is the question of where the money gets spent. In 2007, the Georgia Legislature expressed some clear directions on how Georgia’s tax dollars were spent. The governor did not agree. The ultimate authority to make those decisions is now at play.
Taxes fund the spending and Georgia has plenty of taxes. Georgia has an income tax. Georgia has a sales tax. Georgia has a gasoline tax. Georgia has a property tax. Georgia has an ad valorem tax. Basically, there is not much (if anything) that Georgians do that is not taxed.
And, as Georgians earned more money, Georgia has collected more income taxes from higher incomes. As property appreciated, Georgia has collected more property and ad valorem taxes from higher property values and more expensive automobiles. As Georgians have spent more, Georgia has collected more sales taxes. Effectively, and efficiently, Georgia has taxed prosperity and collected more revenue than ever.
Against this backdrop comes the 2008 Georgia General Assembly session. There appears to be a growing consensus that the time has come for meaningful tax reform. The question is, does the type of tax reform dictate an acceptable level of spending or, does the spending dictate the acceptable type of tax reform.
Two different schools of thought have emerged regarding this fundamental issue on tax reform.
One option is to determine how much can Georgia afford to give back to taxpayers, and then figure out a plan to give only that amount back. The other option is to determine what is meaningful tax reform and then adopt a budget that is limited to the revenues that result.
Unfortunately, there is a risk that the competing philosophical differences on the approach to tax reform may stymie meaningful change. After all, there will be institutional resistance (especially from career bureaucrats) to any change that limits or restricts the growth of government spending.
As a result, there is a third option that remains - business as usual under the Gold Dome. Of course, Republicans in Washington, D.C. tried that approach in the years leading up to 2006. The result was election losses that cost the GOP control in both Houses in the United States Congress - not a good option.